Cadillac Tax Implications and SHOP Awareness

Eighty-two percent of employers offer at least one healthcare plan. Companies of all sizes are offering more options for healthcare plans. Forty-five percent say they are at risk for paying a Cadillac Tax for high-end health plans in 2018. Eighty-four percent of those at risk plan to change their health benefits to avoid the tax.

Fifty-five percent of companies with less than 50 employees are aware of the Small Business Health Options Program (SHOP), compared to 50% last year. A third say they know how to access SHOP coverage for their employees.

Other key findings include the following:

  • 84% of employers say the ACA has had a positive or neutral effect on their business, yet 65% say the reporting requirements are burdensome.
  • Twenty-three percent of small businesses (less than 50 employees) say the ACA has had a negative effect on their business compared to 11% of mid-sized businesses and 10% of large businesses. The reporting requirements have hit medium and large companies the hardest.
  • 84% of employers agree that healthcare benefits are important in attracting and retaining employees. Eighty-eight percent of employees agree healthcare benefits are important to job satisfaction.

Small businesses slow to embrace SHOP exchanges

Small businesses are not flocking to health insurance exchanges set up under the Affordable Care Act in the same way individual consumers are, brokers and business owners say. Though certain small businesses can get tax credits for offering employees coverage through the Small Business Health Options Program, some say choices are too limited and the credits are too low. The Wall Street Journal (tiered subscription model) (1/7)

Employees Say Traditional Open Enrollment is a Waste of Time

Fifty-six percent of American employees with workplace benefits say that the traditional, paper-driven open enrollment process is a waste of time. Seventy percent say that it would be better to do enrollment through an online exchange, according to a study by PlanSource. Sixty-seven percent of employees have to take time out of their work day researching and enrolling in their employer’s plan during open enrollment, resulting in millions of hours of lost productivity. Fifty-five percent of employees who consider the traditional open enrollment process to be a time-wasting experience say sorting through all the options is confusing.

Employees also have these complaints about open enrollment:

  • 32% say it requires too much research.
  • 31% say the forms are hard to fill out.
  • 29% say it takes too long to get confirmation of selections and coverage.
  • 20% say they got confusing information about their benefit choices.
  • 18% say there are too many forms to fill out.
  • 17% say there aren’t enough choices in the benefit plan.
  • 12% had a hard time navigating the online enrollment system.

Employees have these top considerations during open enrollment:

  • 44% choosing an affordable healthcare plan.
  • 37% staying healthy for their family.
  • 37% preparing for a medical emergency or disability.
  • 25% ensuring their family’s financial well being after their or their partner’s death.
  • 8% getting ready for a new family member.

Covered California Announces SHOP Plans

Plans under Covered California’s Small Business Health Options Program (SHOP) now offer more benefit choices and options for adult dental coverage. Employers can offer coverage from two different metal tiers for small businesses starting coverage October 1 or later. The dual metal tiers must be adjoining: Bronze and Silver plans, Silver and Gold plans, or Gold and Platinum plans. Also, alternate benefit designs are being offered through three of SHOP’s carriers: Health Net, Kaiser Permanente, and Western Health Advantage. These alternate benefit designs meet the essential health benefits requirement of the Affordable Care Act, but vary from the standardized benefits established by Covered California. The plans provide expanded employee choice. Also, employers can now offer separate dental plans for adults beginning in 2015. Dental benefits are employee-paid, with no additional cost to employers. The six health plans and 10 dental plans offered through SHOP are a mix of HMOs, PPOs, and exclusive-provider organizations. The health plans are from the following health insurance companies:
• Blue Shield of California
• Chinese Community Health Plan
• Health Net
• Kaiser Permanente
• Sharp Health Plan
• Western Health Advantage

The following are successful bidders for Covered California’s SHOP dental coverage: (Dental Health Services is an additional dental carrier for 2015.)

• Access Dental Plan
• Blue Shield
• Delta Dental
• Dental Health Services
• Guardian
• Liberty Dental
• Managed Dental Care
• MetLife.
• Premier Access.
• Safeguard Health

Businesses are not mandated to enroll in SHOP, and there is no penalty for not participating. California businesses with 50 employees or fewer can choose from quality health insurance plans similar to those available to larger businesses. Businesses with fewer than 25 employees are eligible for tax credits exclusively available through Covered California’s SHOP. Covered California’s SHOP has enrolled 1,714 businesses, which accounts for 11,510 employees and their dependents. Open enrollment for SHOP is available year-round.

Preparing Workers for Open Enrollment

A report by AON Hewitt reveals how employee benefits will change during this year’s open enrollment. The report also gives tips to respond to the changes. Aon Hewitt finds that employees will see the following changes as they enroll in benefits for 2015:

  • • Rising health care costs – Most employers plan to subsidize employees’ health coverage at a similar rate as this year, but as health care costs continue to rise, employees are likely to see higher premiums and out-of-pocket costs. Half of employers increased participants’ deductibles or copays in 2014, and 39% are planning to do so in the next three-to-five years. Employees who cover spouses and other dependents through their employers’ plans may see an even steeper cost increase. Twenty-two percent of employers have reduced subsidies for covered dependents while 18% added a surcharge for adult dependents with access to other health coverage. An additional half of employers surveyed are exploring such approaches over the next few years.
  • Greater likelihood of seeing consumer-driven health plan (CDHPs) options – CDHPs are the second most popular plan choice offered by employers, surpassing HMOs. Fifteen percent of companies offer a CDHP as the only health plan option, and another 42% are considering doing so in the next three to five years. Many employers are also offering a wide range of voluntary benefits, such as critical illness coverage, to help minimize out-of-pocket costs.
  • Programs and incentives that promote healthy behaviors – Most employers are focusing more on health and wellness programs. Seventy-five percent of employers offer health risk questionnaires; 68% offer disease and condition management programs; and 71% offer biometric screenings (e.g., for blood pressure and cholesterol). More companies offer incentives for completing these screenings or participating in certain programs, such as lower medical plan premium. Twenty percent of employers require employees to complete these activities to get expanded health plan choices with additional levels of coverage. In addition, more than a third of employers are tying incentives to outcomes, such as quitting tobacco use, lowering blood pressure, or improving body mass index.
  • • More transparency on costs and health plan choices – Almost all employers are offering health care cost estimators that allow employees to evaluate two or more health care plans at a time, factoring in monthly premiums, co-payments, deductibles, and coinsurance payments. More employers are also providing decision-support tools that enable employees to model out-of-pocket costs based on anticipated health plan use or prior claims information.
  • New ways to select and purchase health care benefits – A small, but growing number of employers are offering group-based health benefits to active employees through private health exchanges. Private health exchanges create a new competitive market for health insurance that provide employees with more health plan options at different coverage levels and price points. Aon Hewitt’s data shows that while just 5% of employers allow employees to purchase benefits through a private health exchange today, 33% said it will be their preferred approach in the next three-to-five years.

How Small Business Can Get the Best Health Coverage at Most Affordable Price

Frank Saltzburg, a partner with Healthcare Solutions Team, LLC (www.ushcre.com) outlines his strategies for businesses to lower their health care premiums while providing the most comprehensive health plans:
•  Always use a professional, state-licensed broker or agent who is certified as a health care reform specialist. They are trained and educated to be aware of the best plans in the ever-changing current market, both in the private and public exchanges. It does not cost you any more to use a broker since major medical rates are already approved by your State Insurance Commissioner.
•  Don’t use a public online quote engine as your final answer. It is only a starting point and is susceptible to data breaches leading to identity theft.
•  Be aware of the limitations of public exchange call center navigators who don’t hold a state-issued health insurance license. In many cases, navigators are not state-licensed to represent major medical coverage and are not even government-certified as health care reform specialists in the Affordable Care Act.
•  Use the bundle concept to give you better coverage at a more affordable price with less out-of-pocket financial exposure.

Saltzburg says there has been an influx of online insurance quote engines through the public insurance exchanges. “The problem here is these public exchange quote engines will list  ‘bargain health plans’ that typically have the smallest network of doctors and hospitals. Many people are shocked to learn their plan’s network is limited to one county within their state and their doctors are not part of these networks. A recent Associated Press survey found that most cancer hospitals don’t accept Obamacare,” he stated.

“One big, ongoing concern is that the average deductible is estimated at $5,000. However, what everyone should really be looking at is the out-of-pocket maximum per calendar year. This is the true financial exposure we all experience. We design our plans so that the deductible and the maximum out-of-pocket exposure are no longer a major issue…We bundle our plans to include accidental coverage to pay up to the deductible amount and cover out-of-pocket expenses. Plus, we offer critical illness coverage to also offset the deductible and any out-of-pocket expenses. The critical illness coverage offers the ability to have a lump sum payout allowing the insured to have an extra $5,000 to $200,000 of living expense money. While people are recuperating from their critical illness, they won’t worry about paying daily living bills. Bundling allows the insured to have a more comprehensive plan with true peace of mind,” he said. For more information, visit http://www.ushcre.com.

Many Small Businesses Aren’t Aware of SHOP Exchanges

Only 59% of small businesses surveyed by Transamerica are aware of the new Small Business Health Options Program (SHOP), compared to 79% of businesses overall.
“Small businesses with fewer than 50 FTE employees are the only businesses eligible to participate in SHOP, yet four in 10 don’t know about it. Businesses of this size employ nearly 34 million workers, according to the Small Business Administration, so it’s a significant gap to address,” said Hector De La Torre, executive director of Transamerica Center for Health Studies.

Twenty-eight percent employers expect their number of employees to increase due to the ACA, compared to 15% that expect a decrease. Sixty-four percent of employers plan on taking some action to comply with the ACA, with 19% planning to change plan options and 17% planning to change insurers. The following are other key findings about employers:

• 29% are researching alternatives that may not require strict adherence to ACA mandates.
• 23% are researching reductions in employees or full-time employees in preparation for changes related to the ACA.
• 33% of those with 100+ full time employees are researching reductions.
• 15% are calculating the cost of the tax penalty vs. the cost of providing insurance.
• Most medium size (50-99 full time employees) employers are aware of the ACA mandate deadline extension.
• 91% of employers with 50 to 99 full time employees are aware that their deadline to offer employees health care insurance was extended to January 2016.
• 85% of minority-owned businesses and 73% of women-owned businesses are taking actions in preparation for the ACA compared to 58% of non minority-owned businesses.
To view the survey visit: http://bit.ly/1lpjfNY.

California’s Small Business Health Insurance Exchange Off to Slow Start

Kaiser Health News reports that California’s insurance marketplace for small businesses has attracted just a fraction of eligible companies, with most being deterred by technology glitches, paperwork delays, and customer service problems. The SHOP program has kind of taken a backseat, said John Kabateck, the California executive director of the National Federation of Independent Businesses. California began offering online enrollment in November. But in February, the exchange suspended Internet sign-ups after applicants ran into such glitches as error messages or delays in loading pages and some applications came in incomplete. The exchange instructed businesses and their brokers to use  traditional paper applications, for now. The online  version is expected to be up again in the fall with more efficient service and a better way to determine eligibility.

Orange County insurance broker Kathy Hope, told Kaiser Health News that the SHOP is just a mess and insurers are offering comparable products outside of the marketplace, so there is little reason to enroll. “The tax credit is a relief for some small businesses, but getting it requires red tape, time and expense. We are encouraging our members to look both in and out of the market,” said Kabateck of the National Federation of Independent Businesses.

Calif. officials scramble to repair SHOP exchange

About 1,200 of California’s 700,000 small businesses have obtained employee health plans through the state’s Small Business Health Options Program exchange. The online portal still does not allow online enrollment, leaving businesses and their brokers to file paper applications. Officials say they are working to correct problems and have the exchange fully operational this fall. Kaiser Health News/Voice of San Diego (5/8)

Covered California Exceeds Enrollment Projections

Covered California has exceeded its projected base enrollment for the 2014 open-enrollment period. As of Jan. 31, 2014, more than 1.6 million Californians have signed up for Covered California health insurance plans or for low-cost or no-cost Medi-Cal.  Nearly half selected a Covered California health insurance plan. In the first two weeks of February more than 100,000 people enrolled in Covered California, increasing total enrollment to 828,638.

Of those enrolled through Jan. 31, 626,210 are eligible for subsidies. Insurance companies report that 80% of enrollees have paid their first month’s premium.  Additionally, 877,000 applicants have been determined to be likely eligible for Medi-Cal coverage. DHCS has transitioned 652,000 people into the Medi-Cal program from the state’s low-income health program. Automated enrollment has allowed county human services agencies to enroll 106,000 people into Medi-Cal coverage, and another 65,000 were enrolled through the Express Lane program.

January also saw a significant increase in the number of Latinos enrolled. For the month of January, Latino enrollment in Covered California reached 28%, compared to a about 18% for October through December. The enrollment rate of Spanish-speaking Californians increased, representing about 11.5% in January, compared to 5% during the first three months of open enrollment. DHCS also reported improved Latino participation among those likely to be eligible for Medi-Cal enrollment. The percentage of Latinos within the applicant pool increased from 32% as of Dec. 31 to 38% through Jan. 31.

Enrollment of young adults 18 to 34 years old is trending slightly upward, at 26% of the consumers who have selected a Covered California health insurance plan. This age group represents about 25% of the state’s population but about 36% of those who are eligible for subsidies.  Most subsidy-eligible consumers who enrolled — 451,074, or about 62% – signed up for a Silver plan, the second-lowest-costing plan of the four plan tiers. About 86% of consumers across all tiers got some sort of financial assistance.

Anthem Blue Cross of California, Blue Shield of California, Kaiser Permanente and Health Net lead the way among plans chosen, collectively reflecting almost 92% of total enrollment. In Covered California’s Small Business Health Options Program (SHOP), 571 small businesses — representing nearly 5,000 employees and their dependents — have enrolled for coverage.

Consumer response to the application process for Covered California and Medi-Cal has been positive. In the first three months, at least 60% of those who completed enrollment said it was easy. About 82% of consumers said they found the information needed to choose the right health plan for them.exchange, ACA, HHS, California,

Last Updated 10/28/2020

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